ERICSSON (LM) TEL-SP ADR (ERIC) Stock Fundamental Analysis
USA - NASDAQ:ERIC - US2948216088 - ADR
8.07 USD
+0.07 (+0.88%)
8.08 USD
+0.01 (+0.12%)
Taking everything into account, ERIC scores 6 out of 10 in our fundamental rating. ERIC was compared to 48 industry peers in the Communications Equipment industry. While ERIC has a great profitability rating, there are some minor concerns on its financial health. ERIC may be a bit undervalued, certainly considering the very reasonable score on growth Finally ERIC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year ERIC was profitable.
ERIC had a positive operating cash flow in the past year.
ERIC had positive earnings in 4 of the past 5 years.
ERIC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ERIC's Return On Assets of 6.40% is fine compared to the rest of the industry. ERIC outperforms 77.08% of its industry peers.
Looking at the Return On Equity, with a value of 19.95%, ERIC belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
ERIC's Return On Invested Capital of 16.16% is amongst the best of the industry. ERIC outperforms 89.58% of its industry peers.
ERIC had an Average Return On Invested Capital over the past 3 years of 10.59%. This is below the industry average of 13.71%.
The 3 year average ROIC (10.59%) for ERIC is below the current ROIC(16.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROIC | 16.16% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.59%
ROIC(5y)12.19%
1.3 Margins
With a decent Profit Margin value of 7.04%, ERIC is doing good in the industry, outperforming 75.00% of the companies in the same industry.
ERIC's Profit Margin has declined in the last couple of years.
With a decent Operating Margin value of 12.47%, ERIC is doing good in the industry, outperforming 79.17% of the companies in the same industry.
ERIC's Operating Margin has improved in the last couple of years.
ERIC's Gross Margin of 47.18% is fine compared to the rest of the industry. ERIC outperforms 62.50% of its industry peers.
In the last couple of years the Gross Margin of ERIC has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 47.18% |
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ERIC is creating value.
Compared to 1 year ago, ERIC has about the same amount of shares outstanding.
Compared to 5 years ago, ERIC has more shares outstanding
ERIC has a better debt/assets ratio than last year.
2.2 Solvency
ERIC has a debt to FCF ratio of 1.13. This is a very positive value and a sign of high solvency as it would only need 1.13 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.13, ERIC is doing good in the industry, outperforming 70.83% of the companies in the same industry.
ERIC has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
ERIC has a Debt to Equity ratio of 0.40. This is in the lower half of the industry: ERIC underperforms 64.58% of its industry peers.
Even though the debt/equity ratio score it not favorable for ERIC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 1.13 | ||
| Altman-Z | N/A |
ROIC/WACC2.61
WACC6.2%
2.3 Liquidity
ERIC has a Current Ratio of 1.09. This is a normal value and indicates that ERIC is financially healthy and should not expect problems in meeting its short term obligations.
ERIC has a Current ratio of 1.09. This is amonst the worse of the industry: ERIC underperforms 85.42% of its industry peers.
ERIC has a Quick Ratio of 1.09. This is a bad value and indicates that ERIC is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of ERIC (0.86) is worse than 79.17% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 |
3. Growth
3.1 Past
ERIC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 1007.02%, which is quite impressive.
The earnings per share for ERIC have been decreasing by -17.01% on average. This is quite bad
Looking at the last year, ERIC shows a decrease in Revenue. The Revenue has decreased by -1.47% in the last year.
ERIC shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.76% yearly.
EPS 1Y (TTM)1007.02%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%154.7%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
3.2 Future
Based on estimates for the next years, ERIC will show a very strong growth in Earnings Per Share. The EPS will grow by 29.53% on average per year.
The Revenue is expected to decrease by -0.57% on average over the next years.
EPS Next Y275.82%
EPS Next 2Y91.37%
EPS Next 3Y57.57%
EPS Next 5Y29.53%
Revenue Next Year-3.47%
Revenue Next 2Y-1.38%
Revenue Next 3Y-0.56%
Revenue Next 5Y-0.57%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 11.21, the valuation of ERIC can be described as very reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of ERIC indicates a rather cheap valuation: ERIC is cheaper than 91.67% of the companies listed in the same industry.
ERIC is valuated cheaply when we compare the Price/Earnings ratio to 27.20, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 11.91, the valuation of ERIC can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ERIC indicates a rather cheap valuation: ERIC is cheaper than 85.42% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.70, ERIC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.21 | ||
| Fwd PE | 11.91 |
4.2 Price Multiples
95.83% of the companies in the same industry are more expensive than ERIC, based on the Enterprise Value to EBITDA ratio.
97.92% of the companies in the same industry are more expensive than ERIC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 6.42 | ||
| EV/EBITDA | 6.49 |
4.3 Compensation for Growth
ERIC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ERIC has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ERIC's earnings are expected to grow with 57.57% in the coming years.
PEG (NY)0.04
PEG (5Y)N/A
EPS Next 2Y91.37%
EPS Next 3Y57.57%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.80%, ERIC has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.64, ERIC pays a better dividend. On top of this ERIC pays more dividend than 93.75% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, ERIC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.8% |
5.2 History
On average, the dividend of ERIC grows each year by 22.02%, which is quite nice.
ERIC has paid a dividend for at least 10 years, which is a reliable track record.
As ERIC did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)22.02%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
53.91% of the earnings are spent on dividend by ERIC. This is a bit on the high side, but may be sustainable.
ERIC's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP53.91%
EPS Next 2Y91.37%
EPS Next 3Y57.57%
8.07
+0.07 (+0.88%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupTechnology Hardware & Equipment
GICS IndustryCommunications Equipment
Earnings (Last)
Earnings (Next)
Inst Owners46.79%
Inst Owner Change-3.54%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap26.90B
Analysts56.43
Price Target8.53 (5.7%)
Short Float %0.92%
Short Ratio1.86
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.8% |
Yearly Dividend0.29
Dividend Growth(5Y)22.02%
DP53.91%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)35.22%
Min EPS beat(2)20.62%
Max EPS beat(2)49.81%
EPS beat(4)3
Avg EPS beat(4)19.97%
Min EPS beat(4)-10.72%
Max EPS beat(4)49.81%
EPS beat(8)6
Avg EPS beat(8)-36.77%
EPS beat(12)8
Avg EPS beat(12)-18.24%
EPS beat(16)10
Avg EPS beat(16)-12.96%
Revenue beat(2)0
Avg Revenue beat(2)-4.24%
Min Revenue beat(2)-6.39%
Max Revenue beat(2)-2.1%
Revenue beat(4)0
Avg Revenue beat(4)-2.41%
Min Revenue beat(4)-6.39%
Max Revenue beat(4)-0.45%
Revenue beat(8)1
Avg Revenue beat(8)-2.58%
Revenue beat(12)4
Avg Revenue beat(12)-1.33%
Revenue beat(16)7
Avg Revenue beat(16)-0.89%
PT rev (1m)3.64%
PT rev (3m)-1.06%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-19.5%
EPS NY rev (1m)2.26%
EPS NY rev (3m)2.35%
Revenue NQ rev (1m)0.27%
Revenue NQ rev (3m)-9.97%
Revenue NY rev (1m)-0.22%
Revenue NY rev (3m)-3.8%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.21 | ||
| Fwd PE | 11.91 | ||
| P/S | 1.01 | ||
| P/FCF | 6.42 | ||
| P/OCF | 5.88 | ||
| P/B | 2.87 | ||
| P/tB | 9.25 | ||
| EV/EBITDA | 6.49 |
EPS(TTM)0.72
EY8.92%
EPS(NY)0.68
Fwd EY8.39%
FCF(TTM)1.26
FCFY15.58%
OCF(TTM)1.37
OCFY17.02%
SpS7.96
BVpS2.81
TBVpS0.87
PEG (NY)0.04
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.4% | ||
| ROE | 19.95% | ||
| ROCE | 20.46% | ||
| ROIC | 16.16% | ||
| ROICexc | 22.13% | ||
| ROICexgc | 48.84% | ||
| OM | 12.47% | ||
| PM (TTM) | 7.04% | ||
| GM | 47.18% | ||
| FCFM | 15.79% |
ROA(3y)-1.18%
ROA(5y)2.06%
ROE(3y)-4.3%
ROE(5y)5.63%
ROIC(3y)10.59%
ROIC(5y)12.19%
ROICexc(3y)14.83%
ROICexc(5y)17.86%
ROICexgc(3y)47.09%
ROICexgc(5y)43.4%
ROCE(3y)13.4%
ROCE(5y)15.43%
ROICexcg growth 3Y9.12%
ROICexcg growth 5Y7.91%
ROICexc growth 3Y-8.84%
ROICexc growth 5Y4.9%
OM growth 3Y-12.66%
OM growth 5Y14.26%
PM growth 3Y-90.62%
PM growth 5Y-61.69%
GM growth 3Y1.11%
GM growth 5Y3.7%
F-Score7
Asset Turnover0.91
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.4 | ||
| Debt/FCF | 1.13 | ||
| Debt/EBITDA | 0.92 | ||
| Cap/Depr | 52.07% | ||
| Cap/Sales | 1.46% | ||
| Interest Coverage | 12.07 | ||
| Cash Conversion | 112.98% | ||
| Profit Quality | 224.29% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.86 | ||
| Altman-Z | N/A |
F-Score7
WACC6.2%
ROIC/WACC2.61
Cap/Depr(3y)47.04%
Cap/Depr(5y)51.35%
Cap/Sales(3y)1.94%
Cap/Sales(5y)2.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)1007.02%
EPS 3Y-38.27%
EPS 5Y-17.01%
EPS Q2Q%154.7%
EPS Next Y275.82%
EPS Next 2Y91.37%
EPS Next 3Y57.57%
EPS Next 5Y29.53%
Revenue 1Y (TTM)-1.47%
Revenue growth 3Y2.19%
Revenue growth 5Y1.76%
Sales Q2Q%-6.21%
Revenue Next Year-3.47%
Revenue Next 2Y-1.38%
Revenue Next 3Y-0.56%
Revenue Next 5Y-0.57%
EBIT growth 1Y72.11%
EBIT growth 3Y-10.75%
EBIT growth 5Y16.26%
EBIT Next Year84.47%
EBIT Next 3Y23.21%
EBIT Next 5Y14%
FCF growth 1Y321.76%
FCF growth 3Y7.36%
FCF growth 5Y33.08%
OCF growth 1Y167.74%
OCF growth 3Y5.8%
OCF growth 5Y22.35%